June-July 2004
Scaling up pastured poultry
Mike Hansen has a plan to overcome production and marketing disadvantages
Milladore, Wisconsin —When it comes to growing and selling organic-certified, pasture-raised broilers to the public, Mike Hansen does not seem to be in a particularly advantageous position.
"Gifts From the Good Earth" farm, which Mike operates with his wife, Debra, and their three children, is located on a gravel road in the middle of direct-marketing nowhere. Central Wisconsin's scanty populace is relatively disinterested in what Mike is selling. "There are scattered people in rural Wisconsin who care about what they eat, but you have to get to the larger cities to make sales," he laments. Those larger cities are a few hours away.
Poultry production also faces obstacles, the largest of which is the fact that springs are cold and winters come early in this part of the world. Mike's birds can't go to pasture before late May, and they must be off grass by early October. The cool, damp climate provides challenges for attaining acceptable feed efficiency.
And getting his product processed is no easy matter in a state that limits on-farm processing to 1,000 birds. The nearest commercial processor that will do the job properly is four hours away in Iowa.
So if Mike has an unfair advantage in the pastured poultry business, it's certainly hard to locate. Yet here he is, having quit his off-farm job, and enthusiastically launching into an integrated, multi-species enterprise centered on a plan that calls for marketing up to 20,000 frozen chickens grossing $80,000 annually in sales from 60 acres of pasture.
He's not there yet — this year's target is just 4,000 birds, plus 25 head of grass-fed beef along with smaller numbers of pastured turkeys and hogs. Debra continues to work full time off the farm. But Mike feels confident that he is developing systems that can produce close to 20,000 chickens with about half-time labor, leaving time to pursue additional marketing channels to sell the product and increase the scope and scale of the other product lines. If the effort succeeds, Debra would have the option of quitting her off-farm employment.
It's a work in progress, and like all grazing farms — even some with national reputations - things change, and mistakes go along with the successes. That said, Mike Hansen has agreed to occasionally contribute articles over the coming months on his production and marketing methods in the pages of Graze. What follows is an overview of "Gifts From the Good Earth," an introduction to Mike's ideas and methods.
Starting chicks
The Hansens buy day old, Cornish Cross chicks from a commercial hatchery starting
no earlier than May 1. Mike converted a portion of an old dairy barn into
a brooding pen capable of starting 1,200 chicks. The 12- by 30-foot area is
bounded by wire hog panels covered with chicken wire. The boundaries are topped
by netting to prevent sparrows and barn swallows from entering the pen. The
barn doors are left open during warm weather to allow for ventilation, but
Mike hangs lightweight cloth over the outer sides of the brooding area to
control air movement through the pen, and prevent the chicks from being startled
when a barn cat walks by. The concrete floor is bedded with pine shavings.
For the new chicks, a portion of the pen is heated to above 90 degrees F. by an LP gas-fired brooder. Temperature levels are decreased as the birds grow. They eat a starter ration from hand-filled, hanging feeders, while water is provided through a pressure-regulated drip system. After the chickens are moved outside at three to four weeks of age, the hog panels are swung upward to allow Mike to shovel the bedding into a gutter. He tries to allow the pen to sit empty at least a few days between batches.
Mike says the brooding system has worked well. Death loss has averaged 10%. Daily chores for 1,200 chicks require no more than 15 minutes. He is considering adding similar brooders to the dairy barn as his business grows, but also fears disease problems. Another option would be developing skid-mounted pasture brooders that, after the heating units were removed, could double as portable growing facilities that would shelter the birds throughout their lives on the farm. "We wouldn't have to transfer the birds from brooder to pasture, and it would be cleaner because we could give the chicks access to the outdoors almost from the start," Mike says.
Pasture growing
The pasture production season starts in late May and ends in early October.
Mike's first experience with pasture accommodations was with an 8- by 12-foot
movable pen made with an oak frame and steel sides that he moved at least
daily. "It weighed about 300 pounds, and it just about broke your back to
move it," he recalls.
After some trial and error, he settled on pasture cages made of cattle and hog panels. Two, 16-foot wire cattle panels are bowed over a pair of two-by-four frames spaced twelve feet apart. Hog panels are placed on the other two sides, with chicken wire preventing birds from escaping through gaps in the panel wires. About half of the side and roof area is covered with a tarp. Positioning the pens so that the tarp is to the windward side has prevented the hoop houses from being turned over in even the highest winds, Mike says. The structure, which weighs about 125 pounds and requires less than $100 in materials, can be moved by hand with a dolly.
While easier to move than the wooden pens, Mike grew dissatisfied with the labor requirements and relatively poor growth performance with the cage production method. In 2002 he changed to a modified free-range system, with the chickens enclosed within about 8,000 square feet bounded by electrified poultry netting. Mike positions five pasture cages within the enclosure, creating shelter and pasture for more than 1,000 birds. With the chicken wire removed, the birds are free to move to and from the structures by stepping through gaps in the wire panels. The netting and panel shelters are moved to a new area of pasture about once a week, although Mike also shifts the shelters a few feet every day or two to prevent manure buildup. Drinking water is piped from the farmstead to the pasture, with water containers placed on low wagons that can be moved with the enclosure. Feed containers are placed in the shelters, and Mike also sprinkles some feed in the pasture to encourage pecking and grass consumption.
He can tend a thousand birds in 10 or 15 minutes, with the weekly moves of the enclosure requiring about an hour. "We found that letting them run free improved their health and demeanor, and it's less labor by far," Mike says. The extra exercise may be slightly reducing weight gains, but grass consumption has increased. Mike asserts that dark meat quality has improved with the change. He says death losses on pasture have declined to less than 5% with the move to the free-range system, as the birds do not peck at each other nearly as much. Other than an occasional hawk attack, predators have not been a problem.
He is planning on modifying the pasture cages to provide more shelter. One problem stems from the fact that the Cornish Cross meat chickens do not roost. "Right now they're on the ground, and they get wet and cold. I think that's costing us some weight gain," Mike explains. He envisions a structure elevated on skids with slotted plastic floors that could keep the birds warmer and drier. These structures could also serve as brooders, allowing the chickens to be associated with one building during their entire, eight-week life span on the farm. Mike believes that with proper management, the farm will be able to consistently keep death losses at 5% from arrival to departure.
The pasture chickens are kept on roughly one-third of the farm's 60 acres of pasture each year, with the production area in a three-year rotation. The birds provide organic-certified fertility and insect control that are also important to the farm's expanding beef cow-calf grazing program. "I want to have a holistic farming system that is good for the earth and produces good quality food for my family and our customers," Mike explains. He says he needs to learn more about helping meat chickens, laying hens, turkeys, cattle and hogs to work together in providing natural pasture fertility and parasite control.
Processing
Mike takes his chickens
to a USDA-inspected plant in northeastern Iowa. He built a trailer capable
of hauling 1,200 birds housed in four-tier, wire cages, and hauls them behind
his pickup truck on the four-hour trip to the plant. The dressed chickens,
which average about four pounds, are quick-frozen at the processing plant.
Primarily because of liability concerns, Mike does not sell any fresh chicken.
The farm has a freezer with a capacity of 1,500 dressed chickens, while any
additional inventory is placed in rented cold storage space. Mike says it
is important to have a year-round inventory to meet the needs of restaurant
and grocery store customers. Early this year he purchased a different truck
and was looking for a larger flatbed trailer to go with it. With re-designed
transport pens, he planned on hauling up to 2,000 chickens to the processor.
Marketing
While Mike strongly believes that marketing holds the key to success for his
poultry enterprise, he laments the farm's "lackluster" performance in this
area. "That has been the fault of working off the farm," he says. Efforts
to market locally have not been very successful. Only about 10% of marketing
revenues come from on-farm sales, and the Hansens gave up on farmers markets
because of the time involved. They sell some chicken to a few natural foods
stores in the area, but Mike does not like to spend time delivering product.
Radio advertising drew very few customers. They developed a sales brochure that has brought in some business. Mike has gained several larger restaurant accounts. However, Internet sales to individuals through the Gifts From the Good Earth Web site were producing more than 60% of the farm's revenues in early 2004. About 70% of total sales are shipped in dry ice through either multi-day ground or overnight delivery services. "Our main focus is now on the Web site," Mike says. "We're part of the 'new economy.' Our storefront is the world."
He designed his own shipping boxes by cutting two-inch thick polystyrene into panels that can be made into boxes capable of holding up to 12 dressed chickens. Each box requires about $4 in materials and 10 minutes to make. Mike reports very few problems with shipping Gifts From the Good Earth products to both coasts, and even as far away as Guam. He dislikes the labor and mess involved with making the boxes, and is working with a company that will be able to do the job for him. The farm can offer overnight ground delivery to Chicago and Minneapolis at a cost of $15 for a 30-lb. box. "Shipping can add 25 to 50% to the cost of small orders, even though we don't build any profit into the shipping," Mike says.
Mike says he wants to keep his prices within the reach of average families with kids. In most cases, organic chicken ordered directly from the farm can be delivered at a price lower than those for organic chicken commonly found in stores. "We want to provide a reasonable price so that people like us can buy our products," he explains. "If I'm going to be successful at this, I have to produce the highest-quality product I can, and I have to get it to the customer at or near the price they see in the local store. At that point, the convenience of the delivery swings the sale our way."
In the late 1990s, the Hansens priced chicken at $1.79 a pound, plus shipping. But their calculations indicated production costs at $1.75/lb., a figure that includes depreciation, but not family labor. With a moderate salary figured in, the breakeven was closer to $2.35. "I called our customers and said that because the price wasn't sustainable, we were raising it. That day we sold 700 chickens," Mike describes. In early 2004, the standard price on the Web site was $2.89/lb.
With a new, USDA-inspected locker plant scheduled to open nearby this year, the Hansens formed a limited liability corporation with a neighbor to operate an expanded pasture-raised, organic and "natural" beef business. They also plan to offer more pastured pork and sell more eggs. Gifts From the Good Earth counts about 250 customers, including about a hundred "regulars" who purchase products at least four or five times a year, Mike says. "The trick is to turn the other 150 into regular customers."
He is targeting the Chicago restaurant market, and envisions working with a warehouse that could provide central storage for several customers, thus limiting the number of delivery trips he'd need to make. Mike says his business may be capable of netting $80,000 per year in profits from chicken sales alone, with the other enterprises adding to that bottom line. He says hiring labor and contracting production to other farms are possibilities if such moves allow Gifts From the Good Earth to operate at a scale that allows Mike to continue with his goal of full-time farming.
Labor
"We're fanatical about labor efficiency. We constantly analyze how long it
takes to do things," Mike explains. When he worked off the farm, Mike was
able to handle chicken chores in both the brooder pen and the pasture cages
in 25 minutes. He calculates that each chicken requires 3.5 minutes of work
to raise, not counting marketing labor or work done on special farm projects.
"I feel I can raise 5,000 birds without breaking a sweat," Mike says. "Our
production model has been based on 20,000 birds a year since day one," he
explains. Mike intends to spend more time on marketing and business management
now that he is not working off the farm. "I'm spending three or four hours
a day at the desk doing business work," he explains. "I'm the kind of person
who loves having 12 things to do at one time. Not everyone is like that."
Finances
In 2003, the farm grossed about $40,000 from the equivalent of about one full-time
labor unit. During their first nine years of operation, the Hansens grossed
about $120,000, and did not draw any money for family living. "We didn't want
to risk everything by jumping in with both feet," he explains. "We wanted
to slowly build something that was sustainable." Mike says he has to work
harder at scaling up the business now that he is not working off the farm.
He and Debra, an accountant, have put together a business plan that calls
for growth and providing some family living from the farm. In a typical year
with no major death losses, Mike says the business can clear about $2 per
bird above production costs to pay for family labor and management. He believes
net profits in the $3-$4/bird range are possible with better production management
at a larger scale.